Would Microsoft-Yahoo! Mean More Competition?
On the surface, Microsoft’s $44 billion offer to acquire Yahoo! seems to simplify the US search market share race.
The combined firm would be second in online ad revenues to No.1 Google, and ahead of AOL. In 2007, Google rang up nearly $6 billion, while Yahoo! had about $3.4 billion and MSN had $1.4 billion net revenues.
The top four portals totaled $12.2 billion in online ad revenue for the year. eMarketer’s projections put this at more than half of the $21.4 billion market total.
But the prospective deal raises many questions. Wired snarkily asked “Do Two Losers Make a Winner?”
“Microsoft and Yahoo’s offering would make them much more competitive, but I do think that individually they’ve been losing share,” says Zorik Gordon, CEO of ReachLocal, in the article. “While the combination will help, it doesn’t address why they’ve been losing share.”
eMarketer senior analyst David Hallerman noted that the deal itself is a long way from finalized.
“Just as many observers simply assumed that the unbeaten Patriots would win the Super Bowl and were wrong, you cannot assume that just because Microsoft is slinging around huge sums of money that they will win Yahoo.”
“And who says that an extended potential purchase will benefit either Microsoft or Yahoo!, even if Microsoft ‘wins’ Yahoo!?,” Mr. Hallerman added. “Combining two very different corporate cultures, especially if Microsoft gains Yahoo! through a hostile takeover, is very chancy.”
Google is already pushing to have any deal reviewed carefully by regulators. The New York Times reported that the firm has also offered to help Yahoo! potentially avoid a hostile takeover.
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Photo by Mattel.
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